Something companies, unions, should already know

By Mary Gowan

Published: Friday, January 11, 2013 at 03:17 PM.

Indiana and Michigan both passed right-to-work laws in 2012, changing the business landscape and presaging what likely will follow in other heavily unionized states. Workers in both states are no longer required to pay union dues and cannot be fired for their unwillingness to join a union. The laws also allow employers to negotiate wages and benefits directly with employees.

Proponents argue that such laws promote job growth. Foreign companies will not locate to states without right-to-work statutes nor will U.S. companies there expand.

Right-to-work legislation is no panacea, however, for what ails unions or employers. When non-unionized employers value profits more than their workers’ welfare, they are engaging in practices just as corrosive as those of the unions that make high wage and benefit demands. Many non-unionized companies pay low wages, limit hours and benefits, and create a work environment that is not healthy for employees precisely because the workers have no collective voice.

For an employer to argue that workers should simply go somewhere else if they don’t like the salary or working conditions is simplistic and disingenuous.

Look no further than Walmart.

In many locations, Walmart’s practices have put other potential employers out of business. And by refusing to buy products from companies that won’t meet their price point, Walmart forces their vendors to pay their employees less in order to make a profit, creating a downward spiral effect on wages.

Inflated wages resulting from some unions’ exorbitant demands, on the one hand, and the deflated wages following from the business practices of corporate bullies such as Walmart, on the other, create an unsustainable environment for business in this country.

Henry Ford believed a century ago that his nascent company should provide employees fair pay, educational opportunities and a safe working environment. Though the United Automobile Workers would gain a foothold in Ford factories, and the early years of their relationship were tumultuous, management and labor discovered ways to work together.

They introduced health benefits and pensions. They developed joint programs focused on work/family issues, quality and production techniques. They collaborated to avoid bankruptcies threatening other automobile makers. Most recently, the UAW announced that all Ford employees could expect an $8,000 bonus check early this year from profit sharing.

Ford’s belief in the importance of the worker and in adopting a collaborative approach to employee welfare should serve as a model for companies today. Unfortunately, it often does not.

Rather than build strong relationships with management, many unions now focus on political agendas, as they did in Michigan when they lobbied (and failed) to make collective bargaining part of the state constitution, or take management hostage. Hostess Brands, the snack food giant responsible for Twinkies, shuttered this fall after the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union refused pay reductions in the face of corporate bankruptcy.

One union failed to protect the jobs of its members and cost 18,500 workers their livelihoods.

Unions also have ill-served their members by creating false expectations of employee worth. Twenty years ago when I started researching the effects of job loss, unionized baggage handlers at Eastern Airlines were making $20 an hour, or about $33.67 an hour in today’s dollars. When Eastern closed, many employees were caught off guard and refused to acknowledge that union wages may have played a role in the airline’s demise.

Workers quickly learned how difficult it was to find new jobs that both fit their skill level and offered comparable pay. The same situation continues today.

Indiana and Michigan both passed right-to-work laws in 2012, changing the business landscape and presaging what likely will follow in other heavily unionized states. Workers in both states are no longer required to pay union dues and cannot be fired for their unwillingness to join a union. The laws also allow employers to negotiate wages and benefits directly with employees.

Proponents argue that such laws promote job growth. Foreign companies will not locate to states without right-to-work statutes nor will U.S. companies there expand.

Right-to-work legislation is no panacea, however, for what ails unions or employers. When non-unionized employers value profits more than their workers’ welfare, they are engaging in practices just as corrosive as those of the unions that make high wage and benefit demands. Many non-unionized companies pay low wages, limit hours and benefits, and create a work environment that is not healthy for employees precisely because the workers have no collective voice.

For an employer to argue that workers should simply go somewhere else if they don’t like the salary or working conditions is simplistic and disingenuous.

Look no further than Walmart.

In many locations, Walmart’s practices have put other potential employers out of business. And by refusing to buy products from companies that won’t meet their price point, Walmart forces their vendors to pay their employees less in order to make a profit, creating a downward spiral effect on wages.

Inflated wages resulting from some unions’ exorbitant demands, on the one hand, and the deflated wages following from the business practices of corporate bullies such as Walmart, on the other, create an unsustainable environment for business in this country.

Companies invested in the welfare of employees are more successful on metrics that matter most. Increases in innovation, profitability, growth and return-on-investment all happen when employees are paid fairly, given benefits that reduce their worry about what will happen if they become sick, and are treated with respect by their supervisors.

Somewhere between the special interest unions and opportunistic Walmarts is the middle ground that America and its workers seek and need. Reluctance to look for this middle ground may be another example of the polarization of American discourse that has so ill-served the political process and fueled extremes of opinion at the expense of the reasonable dialogue that would lead to real progress.

With a new year before us, there is no better time for corporate executives, union leaders and legislators to recommit to building healthy relationships between labor and management, partnerships where everyone thrives.

Mary Gowan is a professor of management at Elon University. She can be reached at mgowan@elon.edu.